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WTI crude got bolstered on the weaker US dollar that got impacted following Fed’s Powell remarks in his speech before the Economic Club of Washington. China’s reopening and Turkey’s earthquake are among the key factors reinforcing crude oil prices.
Powell said very strong jobs data released last week simply affirmed that the central bank has some way to go on raising rates. Powell’s remarks eased market concerns over interest rate hikes, while recovering demand in China also boosted prices. Brent crude futures were up $2.66, or 3.28%, to $84.69 a barrel at the time of writing versus the previous closing price at $81.37.
WTI is sharply pushed higher during Tuesday’s US trading session benefiting from the weaker dollar, and at the time of writing, WTI is trading at $77.67 per barrel, namely up +3.061 (+4.10%) versus the previous closing price at $74.615 per barrel.
Wall Street’s major indexes are in the green territory after Powell failed to pushback against the last week’s US employment report, which triggered broad market reactions, sending the US dollar soaring and US Treasury bond yields jumping more than 20 bps, particularly the 10-year benchmark note rate.
Following Powell’s speech, the Dollar Index is falling 0.35%, down at 103.264, sparking an upward reaction in WTI, hovering around the 20-day Exponential Moving Average (EMA) at $77.61.
Additional factors influencing oil prices are optimism about China’s reopening, and worries about supply shortages after the shutdown of the major export terminal in Turkey in the aftermath of a fatal earthquake. Operations at Ceyhan, Turkey’s main oil export terminal, were shut after an earthquake hit the region. The terminal will be closed until Wednesday February 8.
China’s reopening following the relaxation of the Covid-19 zero-tolerance policy increased speculations that oil demand would increase during 2023. Even the International Energy Agency (IEA) estimates that half of 2023 global oil demand will come from China.
Technically; WTI is trading sideways after Powell finished his speech. WTI broke to new daily highs of $77.11 on dovish remarks by Powell, weakening the US Dollar. Oil managed to gain traction and cleared the 20-day EMA at $77.58, and any potential break above and the $78.00 figure will be a big development.
Powell told the Economic Club of Washington that the January jobs numbers show “why this will be a process that takes a significant period of time” when it comes to tightening monetary policy.
